MUMBAI: Mutual funds have continued to narrow the gap with foreign portfolio investors (FPIs) in stock ownership, reaching an all-time high of 11.10% in the December quarter, up from 10.94% in the previous quarter. This was the tenth consecutive quarter of increase, while that of FPIs declined to a 13-year low of 16.60% from 16.68% in the September quarter.
Reflecting the high volatility in the market, the ownership share of retail investors fell to a four-year low of 7.25% from 7.45% during the reporting period, according to data collated by Prime Database.
The gap between the two largest owners of domestic equities has nearly halved in the last three years alone from 10.51% as of December 2022 and from a peak of 20.70% in March 2015 when the MF share was just 3.56%.
But it has to be noted that being net sellers from the market the whole of last year—ripping the markets of close to $19 billion—it's natural that their ownership share was bound to hit new lows.
“While the share of FPIs further declined to a 13-year low of 16.60% as of December 2025 (down from 16.68% as of September 2025), the share of MFs reached yet another all-time high of 11.10% as of December 2025 (up from 10.94% as of September 2025), making it the tenth consecutive quarter of increase,” the agency said Monday.
According to Pranav Haldea, managing director of Prime Database Group, the balance of ownership in equities is tilting inwards, reinforcing the market’s growing self-reliance, as MFs alone seem set to overtake FPIs in the coming quarters. This trend started with demonetisation in 2016 and accelerated during the Covid years. MFs, flush with retail money coming through SIPs, invested Rs 1.06 trillion during the quarter on a net basis with FII outflows at Rs 11,765 crore (outflow of Rs 42,090 crore in secondary markets and inflow of Rs 30,325 crore in the primary markets) during the quarter.
On the back of the rise in the share of MFs, and after having already overtaken FPIs in the March 2025 quarter, the share of domestic institutional investors also reached yet another all-time high of 18.72% as of December 2025, up from 18.28% as of September 2025, with a net investment of Rs 2.09 trillion during the quarter.
According to Haldea, while MFs played a key role, insurers, AIFs and PMS also played their part with net buys of Rs 21,490 crore, Rs 367 crore and Rs 1,205 crore respectively during the quarter.
On the other hand, the share of retail declined to a four-year low of 7.25% from 7.45%, and so did that of HNIs, which fell to 2.03% from 2.09%. As such, the combined retail and HNI share declined to a three-year low of 9.28% from 9.54%, with individual investors being net sellers to the tune of Rs 57,404 crore during the quarter.
According to Haldea, for decades, FPIs have been the largest non-promoter shareholder category in the domestic markets with their investment decisions having a huge bearing on the overall direction of the market. This is no longer the case. DIIs along with retail & HNIs have now been playing a strong countervailing role with their combined share reaching an all-time high of 28% as of December 2025.
The share of private promoters increased marginally to 40.76% from 40.73%, with a net buy amount of Rs 22,742 crore during the quarter. However, over the past four years, their share has fallen by 446 bps from 45.22% as of December 2021. So did the share of the government which decreased to 8.96% from 9.28%.